Wall Street hits record highs on Trump optimism

The Dow and Nasdaq Composite rose to record highs in a rally fueled by optimism about US President-elect Donald Trump’s policies.

The Dow Jones industrial average on Tuesday ended just 25 points shy of 20,000, a level it has never breached, helped by a 1.68 percent gain in Goldman Sachs, Reuters reports

US stocks have been on a winning streak since the Nov. 8 presidential election, with the Dow up 9 percent and the S&P 500 gaining 6 percent on bets that Trump’s plans for deregulation and infrastructure spending will boost the economy.

“The market is focused on the Trump agenda, which is tax cuts, infrastructure spending and deregulation,” said Jeff Zipper, managing director for investments at Private Client Reserve at US Bank in Palm Beach, Florida.

The Dow rose 91.56 points, or 0.46 percent, to 19,974.62, the S&P 500 gained 8.23 points, or 0.363752 percent, to close at 2,270.76 and the Nasdaq was up 26.50 points, or 0.49 percent, at 5,483.94.

Some investors believe stocks have become expensive. The S&P 500 is trading at about 17 times expected earnings, well above its 10-year average of 14, according to Thomson Reuters Datastream.

The Dow’s 20,000 mark represents a major milestone on Wall Street and some investors believe that piercing that level would signal the recent rally may continue. The Dow first hit 10,000 in 1999.

“To have enough energy to push through that barrier would mean there’s a lot of buying power in the system,” said Brad McMillan, chief investment officer at Commonwealth Financial Network. “Once we do crack through, that ceiling will tend to become a floor.”

The dollar rose to its highest level in 14 years as the strong appetite for risk assets pushed traders out of bonds and into stocks.

Positive comments on Monday from Federal Reserve Chair Janet Yellen on the state of the US labor market also boosted the greenback.

“She didn’t use the opportunity to take the market back from being overly hawkish,” said UBS currency strategist Constantin Bolz, in Zurich.

“Maybe there were some people who … thought they would hold off from further dollar longs until she spoke, in case she were to row back.”

The dollar index, which measures the greenback against a basket of currencies, rose almost 0.5 percent to 103.65, its highest level since December 2002.

Benchmark 10-year US government bond yields, which set the bar for global borrowing costs, hit session highs of 2.59 percent, not far from two-year highs touched last week.

“The dollar and bonds have been trading in lockstep,” said Ellis Phifer, senior market strategist at Raymond James in Memphis, Tennessee. “There are still concerns spending will increase and more debt supply will be on its way.”

Oil prices rose to one-week peaks but settled below session highs after Libya announced the reopening of pipelines after a two-year blockade that ended earlier this month.

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